Morning Read: Japan Gains, Yen Falls Post-Election

By Brendan Conway

Market check: The U.S. dollar hit a 20-month high versus the yen and Japan’s Nikkei 225 index rose 0.9% to reach a nine-month high after the conservative Shinzo Abe’sLiberal Democratic Partywon in the polls over the weekend. The party’s campaign promised, among other things, an aggressive new monetary policy and a burst of public-works spending. The iShares MSCI Japan Index Fund (EWJ) is up 0.5% in premarket trading. From the WSJ: “Bond traders, meanwhile, bluntly warned the finance ministry on Friday that Mr. Abe’s platform could swell Japan’s already-oversize government debt, and the market view is that ‘there could be a spike in interest rates,’ a ministry official said.”

Fund watch:More inflows last week for the iShares MSCI Emerging Markets Index Fund (EEM), possibly at the expense of the Vanguard MSCI Emerging Markets (VWO). Write Index Universe’s Dave Nadig and Olly Ludwig: “Some ETF industry sources have argued that the positive flows for EEM relative to VWO—essentially a reversal of a broad pattern of the past few years—might be related to the fact that institutions still largely favor MSCI benchmarks. That would mean VWO, which next year will stop using the MSCI Emerging Markets Index that EEM uses, could be falling out of favor among such large investors who are preparing for the change.”

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.